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Hello and thank you for contacting us. This is Dwayne B. and I’m an expert here and looking forward to assisting you today. If at any point any of my answers aren’t clear please don’t hesitate to ask for clarification.
Is your company a corporation?
Assuming that you operated the LLC properly (didn't pay personal bills out of the corporate account, etc) then it should provide protection for you. That is one of the main purpose of incorporating.
I did spend a portion from time to time.
You can also talk to a bankruptcy lawyer about possibly putting the LLC into bankruptcy
Would that protect my home?
Yes, that should protect you completely.
The big thing about an LLC is always act like it is a corporation and then it protects you.
I am currently under contract and don't wish to go bk just yet. Are there other options?
I still wish to stay in business but maybe operate under another LLC
You can hire a lawyer and they can delay the proceedings a while.
How much time is left under the contract?
Three more months
The lawyer can easily stretch it out that far. You can then start a new corporation, handle it correctly, and continue doing business but discuss this with the lawyer that prepares the LLC documents.
Be sure you understand how to "act like a corporation".
I've learned my lesson. I am trying to avoid bringing the family into the mess and trying to save themmes.
I need to know for sure that the house cant be touched. How do I find that peace of mind?
That's the way to do it. Just so it's clear. 1) Hire a lawyer, 2) explain to them you're trying to delay for a while, 3) file bankruptcy (if need be) and 4) form a new LLC.
A bankruptcy protects the house. Also, let me check and see the exemption level for the house.
The house is in CA as well?
Just one sec
The CA homestead exemption is a little more complicated than in most states. Youcan exempt up to $100,000 if you live with one or more family members; $175,000 if you are 65 or older, or physically or mentally disabled; $175,000 if 55 or older, single, and earn a gross annual income under $15,000 or are married and earn a gross annual income under $20,000.
That is the amount of equity that is exempt.
I don't think I understand. The house is paid off. worth 700
55 and older
It's worth $700k?
Only those amounts are exempt from creditors. However, since it is the LLC that is being sued then you may be able to just file a bankruptcy for the LLC and not personally and thus clear the debt without the house being involved at all.
Once bankruptcy is filed, can they still go after the house?
Not generally. You're going to have to spend some time going over the specific facts with the lawyers but the other side are still a long way from being able to go after your house.
You may also want to talk to the lawyer about ways to protect your house in the future like using a trust, a family limited partnership, etc.
That probably won't help you with this case but it's a good idea for the future.
You're very welcome.
I appreciate your advice.
Glad to help.
Best wishes to you on this and please don't forget to leave a Positive Rating (of course I’d suggest Excellent!) so I get credit for my work.
Anything else I can assist with before I exit to help others?
That should take care of my concerns for now. Thank you again..
Thank you for your previous assistance.
I now ask the following:
If in litigation, can I dissolve my current business? There are still no judgments or court ordered penalties. Or do I need to go through a bankruptcy to close everything once and for all?
Thank you for the clarification.